WASHINGTON — Federal regulators on Wednesday proposed a plan to allow public companies to begin using international accounting standards for reporting financial results in two years, and may require them to do so starting in 2014.
The push by the Securities and Exchange Commission toward acceptance of a single, global accounting standard has raised objections from some investor advocates and key lawmakers.
Supporters of the change say it makes sense in an era of increasingly globalized financial markets and would help lure foreign companies to U.S. markets.
The five SEC commissioners voted unanimously at a public meeting to propose a timetable for the switch to international financial reporting standards, or IFRS, to replace the U.S. standards known as generally accepted accounting principles, or GAAP.
Under the proposal, U.S. companies would have the option of adopting the international standards starting in 2010. The agency then would assess the outcome and decide the following year whether to make it mandatory for all U.S. public companies beginning in 2014 with completion in 2016.
The SEC could formally adopt the proposal sometime after a 60-day public comment period.
Wall Street interests and the accounting industry welcomed the plan Wednesday.
Many foreign public companies comply with the international standards, and some had argued the U.S. mandate was burdensome and costly.
But Senate Banking Committee chairman Christopher Dodd, D-Conn., and Sen. Jack Reed, D-R.I., who heads its securities subcommittee, criticized the change. They contend it was premature because the convergence of GAAP and international standards isn’t expected to be achieved until 2011.
Critics of the move say investors will lose an important source of information used in making decisions and that it will be harder to compare the results of companies that use different standards.
